Two of the hottest stocks on the markets this year are Vertex Pharmaceuticals (VRTX 0.68%) and Occidental Petroleum (OXY -0.83%). Vertex is up almost 37% so far in 2022 and Occidental is up an amazing 156%! As well as they have been performing, investors shouldn't assume that it's too late to buy into these stocks right now. Here's why these two hot growth stocks could continue to do well in 2023.

1. Vertex Pharmaceuticals

You might not be able to tell there's a bear market going on with how strong Vertex Pharmaceuticals' stock has performed this year. Up an impressive 36.9% so far in 2022, it is far eclipsing the S&P 500, which is down 16.6% year to date. 

Vertex's recent results offer clues about why the business could continue to do well. In the third quarter (for the period ended Sept. 30), the company's revenue totaled $2.3 billion and rose 18% year over year. Its cystic fibrosis pharmaceuticals continue to generate strong growth for the business, with Trikafta/Kaftrio bringing in more than $2 billion in sales just in Q3, up from less than $1.6 billion in the prior-year period. The company's bottom line also rose, with earnings of $931 million climbing 9% higher year over year.

The company anticipates more growth as it launches Trikafta/Kaftrio outside the U.S. and obtains approvals for the treatment to be accessible to younger patients. Last year, the Food and Drug Administration approved the medication for children as young as 6 who have certain mutations. Vertex currently has phase 3 trials ongoing which could expand the treatments use to children between the ages of 2 and 5.

Shares of Vertex are trading at 24 times earnings, which is a bit higher than the 22 times earnings of the average healthcare stock. But with the growth opportunities ahead for Vertex, a premium is certainly justifiable. Plus, Vertex is an incredibly profitable business with strong margins that can quickly bring down that earnings multiple in the future.

VRTX Profit Margin (Quarterly) Chart.

VRTX Profit Margin (Quarterly) data by YCharts.

2. Occidental Petroleum

Another company that is raking in profits these days is Occidental Petroleum. Billionaire investor Warren Buffett, through his holding company Berkshire Hathaway, began buying stock in Occidental at the start of 2022 and bought up more shares throughout the year as rising commodity prices have led to a strong performance for the business. 

Net income through the first three quarters of the year has totaled $10.8 billion -- that's more than seven times the $1.5 billion it earned in all of 2021. Its daily production volumes aren't higher than what the company averaged last year, but the key difference is that the company is benefiting from higher oil prices. On oil, for example, its average realized price for a barrel of crude was $98.30 this year and is 49% higher than the $66.14 it averaged in 2021.

Although the price of oil has dipped in recent months, Occidental's $2.5 billion profit in the third quarter (ended Sept. 30) would still put the company at an annual profit run rate of $10 billion. But there's potential for oil prices to rise higher with the Organization of the Petroleum Exporting Countries planning to cut oil production by 2 million barrels per day.

The incredible profits Occidental posted this year made its price-to-earnings multiple look low at just 6. However, even on a forward basis (based on analyst projections), the stock is trading at less than 8 times its future profits. Given its modest multiple and oil prices remaining high and potentially rising in 2023, Occidental's stock could continue to do well next year. Thus far in 2022, its shares are up an impressive 160%.